Buy BABA Stock? Yes! The Bull Case for Alibaba.

  • China’s internet watchdog is reportedly taking a share position in Alibaba (BABA).
  • Plus, regulators in China have apparently cleared Alibaba affiliate Ant Group of a host of charges.
  • Investors should start a position in BABA stock or add to an already existing stake.
BABA stock - Buy BABA Stock? Yes! The Bull Case for Alibaba.

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2023 could easily be the year when Alibaba (NYSE:BABA) stock roars back. For years, Alibaba and other technology companies have faced a difficult regulatory environment in China. Plus, it seemed that Ant Group, Alibaba’s fintech affiliate, was in the crosshairs of Chinese authorities. Yet, the crackdown may be coming to an end, or at least relaxing somewhat, and that’s positive for Alibaba.

When you think of tough business conditions in China, you might immediately think of Covid-19 lockdowns. That’s certainly an issue that investors in Chinese companies have to contend with.

However, Alibaba and other technology businesses have faced particularly restrictive conditions, even beyond the pandemic lockdowns. On the other hand, signs of regulatory easing could spur a relief rally in China’s tech stocks. So, are you ready to give international investing a try with one of the world’s biggest e-commerce names?

What’s Happening With BABA Stock?

Just because Alibaba is a gigantic e-commerce company, doesn’t mean that the company’s investors have made money hand over fist. Bear in mind, BABA stock once traded above $300 in 2020, but now it’s only around $120.

That’s a heck of a share-price haircut, and it may be an overreaction. Granted, China’s authorities gave Alibaba a hard time during the nation’s tech-company clampdown. Some folks might have even wondered whether Alibaba affiliate Ant Group would survive.

There’s good news on that front, however. According to the Wall Street Journal, China’s central bank acknowledged that Ant Group has rectified its alleged issues. The People’s Bank of China (PBoC) had previously identified issues with Alibaba and other tech-related businesses; these alleged problems included “unlicensed operations, the disorderly expansion of business, and infringement of consumer rights.”

Easing Regulatory Conditions in China Could Favor Alibaba

Now that Ant Group has been cleared of the PBoC’s charges, it can become a fully regulated Chinese business. That’s encouraging, and it’s not the only positive development that BABA stock traders should know about.

Another Chinese government entity, one that functions as the country’s internet watchdog, recently invested in Alibaba. The WSJ reported, “A Beijing-based entity controlled by the Cyberspace Administration of China [. . .] took a 1% stake in a Guangzhou, south China-based Alibaba business on Jan. 4.”

In the U.S., it would be frowned upon, and possibly illegal, for a federal entity to openly invest in a famous private business. The rules are evidently different in China, however.

When part of the government has skin in the game, that’s definitely a good sign for a company and its stock. This is government backing taken to a whole new level. Maybe you think it’s ethical, or maybe you don’t. Either way, it certainly sounds bullish for Alibaba in 2023.

Prepare for Potential Upside With BABA Stock

Could BABA stock revisit $300? It won’t happen overnight, but the easing of China’s harsh regulatory conditions could heavily favor an investment in Alibaba.

So, don’t be afraid to try international tech-sector investing. Alibaba had some rough years, no doubt about it, but it’s still an e-commerce giant — and with a powerful government agency taking a share position, Alibaba looks like a sure winner this year.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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